Lecture 5

Question 1

Inheritance tax

Answer 1

Inheritance tax is a tax that is charged on assets of the person transfers (gifts) to someone else

Question 2

Types of transfers

Answer 2

– Exempt transfers
– potentially exempt transfers
–Lifetime chargeable transfers

Question 3

Chargeable lifetime transfers

Answer 3

Unless a lifetime transfer as a PET (to an individual who isn’t dead) it will be charged lifetime transfer

Question 4

Exemptions

Answer 4

Small gift individuals of £250 or less
Gifts on marriage up to
– £5000 if from a patent of bride/groom 
– 2500 from a remote ancestor 
– £2000 if made from bride to groom or vice versa
– £1000 otherwise

Question 5

Taper relief and relief for lifetime tax

Answer 5

period between death and transfer

<3yrs = 0% reduction 
3-4 = 20% reduction 
4-5 = 40% reduction 
5-6 = 60% reduction 
6-7 = 80% reduction

Question 6

NIC Class one primary

Answer 6

Employees aged between 16 and pension Age pay
Are calculated on gross pay before the ducting pension contributions and any other exps paid by employee
Employees don’t pay NIC on benefits in kind
Calculated in relation to a “contribution period” - a period for which the employee is being paid (eg weekly, mthly)

Question 7

Class one contributions (secondary)

Answer 7

Weekly pay
On the first £169 = 0%
Remaining = 13.8%

Monthly pay
On the first £732 = 0%
Remaining = 13.8%

Question 8

Employers are not required to pay class one (secondary) for earnings up to £162 per week for employees

Answer 8

– Under the age of 21

– apprentices and under the age of 25

Question 9

Class 1A contributions – on benefits in kind

Answer 9

Generally exempt from both primary and secondary class one NICs
Therefore employees pay no NICs
Employers must pay class 1A contributions on taxable benefits in kind

Question 10

Class two contributions – self-employed

Answer 10

Self-employed individuals are generally required to pay class to NIC is at a flat rate of £3.05 per week
But class two contributions aren’t required if profits for the tax year are less than the small profit threshold of £6475

Question 11

Class for contributions – trading profits

Answer 11

Self-employed individuals are also required to pay profit-related class 4 NICs
Main rate class for a NICs are calculated as 9% of individuals taxable profits between lower profit limit of £9500 and upper profit limit of £50,000
Any further profits be and £50,000 are charged to class 4 NICs is at 2%